Wednesday, May 09, 2001
CD burning company Roxio to step out on its own

"...Roxio will be spun off from data storage firm Adaptec next week and hopes to become as well known to music fans as Elvis, or even Napster. The little-known company is a leading provider of digital media software to personal computer giants like Dell, Hewlett-Packard and Gateway. Roxio's CD-burning software, Easy CD Creator for Windows and Toast for Macintosh computers, is the best-selling software of its kind. It was bundled with about 24 million CD recorders in 2000 alone, accounting for about 70 percent of the entire CD recorder market that year.

Roxio is now hoping to go mainstream with a huge magazine promotion in coming weeks, according to Chris Gorog, chief executive officer of Milpitas, Calif.-based Roxio. Roxio will be spun off to Adaptec shareholders on May 11 and begins trading on the Nasdaq stock market starting May 14, under the ticker symbol ROXI. Gorog said Roxio's sales rose to nearly $120 million for fiscal 2001, which ended March 31, from $13.3 million in fiscal 1996. In fiscal 2001 it had a pro forma, pretax margin of over 20 percent.

About 60 percent of Roxio's business comes from its partnerships with major PC makers with the remaining 40 percent derived from retail sales. He said a slowdown in PC sales will not severely hurt the company due to increasing recordable CD drive adoption. Nevertheless, analysts said Roxio needs to expand into video applications to sustain its growth. Gorog said Roxio was poised to expand in the video recording market: "..In the next four to six weeks, we'll be making a big announcement on Roxio's entry into DVD recording.."..."